Michael Gibbs

Too many architects face unfinished business. In fact, almost two-thirds of architects have at least one stalled project on the books due to lack of financing, in spite of record-low interest rates, according to a May 2011 survey by the AIA. Fortunately, a new AIA initiative is under way to jump-start stalled projects. Partnering with Clinton Global Initiative (CGI) America, the AIA pledged to create a database of stalled architecture projects that make economic sense but lack funding.

“Banks just won’t lend,” says Frank Harmon, FAIA, principal of Frank Harmon Architect PA, based in Raleigh, N.C. “We have a project we designed three years ago, and the bank said they’d lend us the money. The project is now ready to go, but they [the bank] suddenly won’t lend.” This problem doesn’t just weigh on architecture firms. The U.S. Census Bureau estimates that the job-creating potential of the design and construction industry accounts for $1 in $9 of the U.S. gross domestic product.

Established by former President Bill Clinton in 2005, the CGI network convenes stakeholders from the private and public sectors to stimulate economic growth through job creation. Members commit to finding innovative solutions to the world’s economic issues, while also doing social and environmental good. The hope is that the AIA’s database will shed light on the problem of stalled projects, while surfacing still-viable projects to investors.

Serving as more than a simple list, the AIA’s database of stalled projects will be a tool that informs the industry and investors about the scope of stalled projects in need of financing. The AIA was approached about the concept of working within the CGI network of partners to match funding sources to stalled projects.

“CGI’s membership is large and influential,” says Paul Mendelsohn, AIA’s vice president of government and community relations. “We see lots of promise in this collaboration. Our hope is that this database catalyzes job growth in construction, and illustrates how jobs in that field have a strong and lasting impact on the economy.”

The stalled project database will be generated by surveying firms to collect quantitative information about stalled projects. Based on responses, a team lead by Kermit Baker, chief economist, AIA, will eliminate projects that are no longer considered suitable for development. For example, plans for a huge shopping complex may no longer make economic sense, given the state of the retail industry.

“Many projects that would have been a slam dunk three years ago are no longer viable,” Baker says. “We’ll gather more information from firms, then determine the market value of [stalled] projects to create a list of projects that look viable today.”

Viable projects need to contribute to a triple bottom line. “They have to be energy-efficient, contribute to the health and development of the workforce, and be economically viable. Sustainability is a huge component,” Mendelsohn says. Given the public’s endorsement and energy costs, green projects may catch the eyes of potential investors first.

At this year’s CGI America conference in June, people were buzzing about the growth of the sustainable-design industry. U.S. Secretary of Energy Steven Chu announced the Better Buildings Challenge, recognizing and supporting organizations that commit to make America’s buildings more energy efficient. U.S. Secretary of Agriculture Tom Vilsack shared his vision of sustainable design both revitalizing the economy and becoming an export opportunity.

“When we come out of this recession, I think we’re going to realize that we need to be smarter,” Raleigh’s Harmon says. “We can’t get products as cheaply as we used to. We have new competition from China and other places. Green building is just the right thing to do. It’s not simply about saving energy or costs. It’s better for you.”

Do you have a stalled project on the books? Please contact the AIA at stalledprojects@aia.org and share your experience.

Be sure to include:
• Your name, firm name, and contact information
• The project type and name
• City and state of the project
• How large the project is, in terms of square feet and cost per square foot
• How many jobs your firm or your contractors could create if it moves forward, if known
• An electronic picture of the project or design (if applicable, JPEG or other similar format, please)

For stalled projects, please also answer the following questions:
• Why has the project stalled?
• Were any jobs lost due to the hold up?
• Would an increase in the energy-efficient 179d tax deduction help this project move forward
• Would increased access to financing through the Small Business Administration or other programs help move the project forward?

For projects that have received the 179d deduction already, please also answer the following questions:
• What were the main efficiency measures included in the project?
• How was the surrounding community impacted by this project (i.e., jobs created, increased economic development and revitalization efforts, improved access to transportation, etc.)?
• How much energy did the project save?
• Was the 179d deduction instrumental in this project moving forward?
• How would an increase in the deduction have impacted this project?